RULING ON
CONVENTION CENTER TAX IMMINENT

Judge to determine whether hotel tax to finance plan is legal

The fate of the planned expansion of the San Diego Convention Center could be determined Thursday, when a court ruling is expected on the legality of a hotel tax that would finance much of the project’s $520 million cost.

A court hearing has been scheduled for Friday to hear the case, but Superior Court Judge Ronald Prager is expected to issue a tentative ruling on the case Thursday.

At stake is the financing plan for the convention center project, which calls for roughly 740,000 square feet of additional space that city and business leaders say is needed to attract major conventions that are now going to cities with more spacious centers.

While the project has been approved by the City Council and San Diego port commissioners, the city has held off on moving forward with the expansion until the legality of a hotel room levy is confirmed by a court. The surcharge, already approved by the city’s hotel owners in a mail ballot election, would range from 1 percent to 3 percent of room rates, depending on how close hotels are to downtown.

The city filed its own lawsuit to validate whether the hotel tax is legal, but two other lawsuits were filed as well, challenging the legality of the room surcharge. At issue is who legally is permitted to vote on whether such a tax can be enacted.

Opponents argue that the tax is illegal because under the California Constitution, the special tax approved by the hoteliers requires a public citywide vote.

Calling it a “Franken-tax,” attorney Cory Briggs, who is representing San Diegans for Open Government, contends in court papers that the state constitution and city charter both require that the tax be approved by a vote of the city’s registered, natural-person voters.” Numerous state propositions, beginning with Proposition 13 in 1978, dictate that voters “will not tolerate any new tax without their consent.”

Attorney Michael Weed, a private attorney who is representing the city of San Diego, argues that the special convention center district formed to finance the expansion is a legal means for raising tax revenues voted upon by those hotel properties that will be paying the tax.

“The special tax has to be approved by a two-thirds majority vote, and in the special tax world of the community facilities district, the voters who get to decide whether the tax is imposed on their property are the owners of the property,” Weed said.

The city had hoped to open an expanded center by 2017, but if a final ruling on the tax question is appealed, construction would have to be delayed until there is legal certainty on the tax question.